Article
Index
Computachem
E-Newsletter
Editor:
Neil Johnston
Regular Contributor:
Rollo Manning
This month we begin to publish our e-newsletter twice a month. This has been precipitated by the extraordinary pace of events occurring from within and without pharmacy. The prime cause of this movement is the pace of globalisation. Global players have targeted Australia across the board, and enormous sums of capital are being dedicated in this regard. Pharmacy is definitely not immune, with some of its industry icons already feeling the cold rush of air, as these global giants engage in heavy breathing and exert pressure. The potential for major change is with us right now and we should not be surprised when it occurs. This edition appears as a full format e-mail edition, but future editions will have part of an article plus a link back to the Computachem web site, so that the increase in information can be more readily accommodated. Already, we have designed a magazine format, with indexing of articles from earlier editions and efficient navigation features to move around the material that interests you most. Well, my timely warning in the last edition, about computer viruses appearing in e-mail attachments, was certainly vindicated by the appearance of the "Love Bug" virus and the devastation it caused. Hope you were not caught out! In the aftermath, Microsoft has declared that it has no plans to change some of its software features, specifically the VB script within Microsoft's Outlook. Because most of the viruses are set to target Microsoft systems, most other systems are currently immune e.g. Macs and Linux. Criticism is being leveled at Microsoft in that they are not tidying up their act and producing a quality product, giving protection to their clients. The now flawed strategy appears to be "bottom line" driven, by racing ahead with newer versions of a product and ignoring the security problems of the older versions. There is some validity in this criticism. As we are begin to rely on e-mail and the Internet for a variety of business solutions and applications, confidence is needed where money is involved. Each time it is demonstrated that a major system can be penetrated, hesitancy increases, particularly when credit card transactions are involved. Pharmacists should look to protect their systems with anti-virus programs, regularly updated, and perhaps replace their Microsoft e-mail system. Be assured that at Computachem we do have the latest anti-virus screens, and that our method of not delivering the newsletter as an attachment, completely bypasses any viral problem. It is also impossible to infect the links between your e-mail and the Computachem web site. Your attention is also drawn to Rollo Manning's thoughtful article on a new medication system being developed. The information detailed should be read in conjunction with all other movements illustrated in this newsletter, both from within and without pharmacy. We urge you to begin thinking strategically on a broad front and we hope this newsletter acts as a stimulant.
Just a few recent Internet statistics, which might reinforce your own strategy, for an e-commerce presence. Australian shoppers are taking to the Internet in droves and lead the world in terms of purchasing satisfaction, with up to 77 percent indicating that they were "very happy" with their experience. This compares with 76 percent in America and 73 percent in Canada. In degrees of unhappy experience, only 6 percent of Australians gave a "thumbs down" vote.Looking at the worldwide Internet market, Australian shoppers occupy a 14 percent component, and do not hesitate to use their credit cards (71% of Australians compared with 50% of all purchasers outside of America). Traditional shoppers within Australia pharmacy have always been female in the majority. How are these traditional shoppers coping with the Internet and e-commerce? Well, figures released for the week ending April 2nd indicate that in America they were very active, with most visiting Lancome.com and PriceWatch.com. Most of these female surfers were based at home and the major items purchased were makeup, fragrance and skin care. Lancome was the top female site with a 94% visitation rate. For female surfers at work, the most visited site was LTDCommodities.com, a general online catalogue retailer. Visitation to this site was 94% female. Men at home visited PriceWatch.com, which sells computers. Approximately 90% of visitors to this site are consistently male. For men at work, the top site was TheOnion.com, a satirical weekly newspaper. Males accounted for nearly 96% of the visitors to this site. This gives a pointer for Australian pharmacies as to how they should structure an online catalogue. The major factor influencing female e-commerce converts, is the confidence to enter the Internet in the first place. Education is a key factor and it is suggested that computers set up within the pharmacy, in an Internet ready state, might develop as a useful marketing tool. They would serve as a useful talking point, and an educational model, particularly if helpful staff acted as catalysts, and stripped away the mysteries for their customers. Only this week newspapers have begun to produce Internet supplements in lay language, designed to educate and assist potential shoppers. Consumer magazines are also appearing in newsagents, devoted entirely to e-commerce. The race is now on to secure Internet consumers, and it has the potential to take a large market share out of pharmacy, if no corrective action is taken. Expansion on the Internet is a bewildering phenomenon. According to the American magazine Industry Standard, 146,671 individuals logged on to the Internet for the first time, on every day in 1999, and there are now 2 billion Internet users. Every 24 hours, 1.9 million new web pages were posted as well as 12,981 domain names. Current research indicates that by 2002 there will be 8 trillion web pages. In Australia, the number of domain sites increased from 792,351 to 1.09 million, which is an increase of 38% over the previous year. It is also 2% of all public sites worldwide. Most interesting is that 34% of Australians have now made an actual Internet purchase, while 51% of Australians have used the Internet to research a product or service. Don't try to pressure your supplier to stop supplying e-commerce pharmacies such as Pharmacy Direct. The Australian Competition and Consumer Commission (ACCC) has warned that trade practice rules apply to all, and any anti-competitive behavior will be investigated. Online department store, Dstore, recently complained that it had become a target, and its suppliers were being pressured not to supply from a number of "bricks and mortar" retailers.
The following is an extract from an e-mail received from a pharmacist newsletter subscriber, following edition#3:
"Very good article on E-Coles. However you overlooked an
e-commerce site that was launched on April 10 and in less than 3 weeks
has reached the number one shopping site in Australia, validated by www.top100.com.au/aust/shopping_and_classifieds/shopping/
Coles on line is at 13 and BigW at 27. I refer to www.a2k.com.au the new
open public site of the new look Amway Corporation. Shoppers can log on
as Clients and buy at Retail and pay a small delivery charge, or they
can register as a Member and buy at an average of 20% off retail, again
with a small delivery charge. Or they can register as an Independent Business
Owner, and apart from buying at the discounted prices, enjoy free delivery.They
can also share in the profit generated, which is up to 62 cents in the
dollar. The traditional Amway products only amount to about 10% of the
total range of 7000 products from 300 manufacturers."
Thank you for the contribution. The
site contains a significant range of pharmacy type merchandise- Editor
COMPLEMENTARY THERAPIES IN HOSPITALS?
Approximately six weeks ago, the Therapeutic Assessment Group (TAG) held a seminar entitled "Complementary Therapies: Facts, Fictions and the Future". The seminar was designed to provide a forum for all the players involved in orthodox medicine, plus a sprinkling of complementary therapists. The information gathered and exchanged, forms a basis for advising the NSW government on whether complementary therapies and medicines should be introduced into NSW hospitals, and if so, how? TAG is a committee of clinical pharmacologists, pharmacists and clinicians committed to promoting quality drug use in hospitals and the wider community. It is an independent, incorporated association and membership is representative of the teaching and referral hospitals and academic units in NSW. The group has considerable expertise in therapeutics and access to strategic information, which facilitates a unique role in providing advice and support to decision-makers in public hospitals, government and other professional organisations. The seminar commenced at 8.30 am, and except for refreshment breaks went through to 6.30 pm that evening. The content was too voluminous to go through in detail at this time, but as a thumbnail sketch, complementary therapies and medicines will be recommended for use in NSW hospitals, utlising the best possible evidence and information. It was recommended that protocols be drawn up and hospital pharmacists should be a primary information source. It was interesting to note that there was a recommendation suggesting doctors should consult with alternate therapists as a source of primary information. Also, that a common education system evolve, without each discipline setting up a separate school, and that it be at a degree level with practitioners to be registered. The AMA opposed the latter, stating that because of existing training, they already had the qualifications. This notion proved non too popular with the audience! One of the better speakers on the day proved to be a non medical person in the form of Ms Janne Graham, a former executive officer of the Consumer's Health Forum. This intelligent and intuitive lady left no doubt that the consumer of health services was in the "captain's seat" and that the various professions should stop trying to carve out exclusive territory. More, the professions ought to be identifying consumer need as a team, and listen to consumers when they endeavor to engage the various medical services in a quality and economical service model. She also applauded pharmacy mail order operators providing reduced prices for drugs. So it seems that it is not a matter of if, but when, complementary therapies arrive in NSW hospitals. On another issue, given the obvious voice that consumer's are being given through their organisations, the Pharmacy Guild's attempt to force the Therapeutic Goods Administration to curb the activities of Pharmacy Direct Mail Order appears a bit futile. Perhaps the high ground could be taken in that particular debate, by delineating a code of conduct and procedure for mail order operations, that we can all live with.
Most of the online stock broker sites crashed under the weight of trading pressure when the market for technology stocks experienced a 40 percent increase in trading. E*Trade had to close for two hours on April 18th and the Westpac site had traders delayed for up to three hours plus no access to trading information for most of the day. This is a problem experienced by some cyber retailers just prior to Christmas, when a surge in buying clogged up some sites such as Toys'R Us, as reported in the first edition of this newsletter. The retailers, and now the brokers, have launched an immediate upgrade program to ensure the problem does not occur again.
TELSTRA MOVES TO IMPROVE INTERNET SERVICES
Asymmetric Digital Subscriber Lines (ADSL) will be connected to 90 percent of households and businesses within two years. This new technology means that faster access to the Internet, quicker download times, and dial-up modems will become progressively obsolete. Coupled with this development is an increase in "Big Pond" packages available to small business. The new "Business Starter" package includes 200 hours of Internet access per month from 7am to 7 p.m. and allowing 10mb of disk space, 5 e-mail addresses plus no download limits, all for $28 per month. A second package is "Small Business Any Time", which provides 24 hours of Internet access and a greater geographical coverage, for an amount commencing at $16.95 per month. Meanwhile, Telstra has also shown interest in developing an Internet health portal in partnership with the Division of General Practice. Because of the size of the project, other players such as Optus, Cable and Wireless and IBA Technologies are also keen to participate. The project will be titled Health Exchange and is designed as a method for G.P's to pool information between themselves and other health practitioners. Macquarie Technology Investment Banking is providing a major source of startup capital, with a commencement anticipated sometime this month.
Sofcom, a relatively new Australian e-commerce participant, have come to the conclusion that Pharmacy will come under extreme pressure in the coming years, because of the number of new players investing in e-commerce health. Just about every new e-tailer startup decides to have a health department, or toiletries and cosmetics. This is because health sites are some of the most visited areas on the Internet. To date, pharmacy does not seem to have identified the need for a competitive Internet strategy (although the Guild announced program "Pathways in an e-commerce World" may go part of the way) and this needs to be urgently addressed. Of more concern is the decision by Woolworths to set up a "wellbeing" store in Prahran, Victoria, which is due to open in July. The initial store will have a floorspace of 2788 square metres (30,000 square feet in real numbers), and the inventory range is just being finalised. It is understood that a core range of food with health benefit (organic, low fat etc) will provide the nucleus, plus functional foods, nutraceuticals and nutritional supplements. Consideration is being given to selling cosmetics and lifestyle items. As this is a test store, the range will evolve over time, but it is obvious that it will take market share from pharmacies and health food stores. Woolworths is also developing its e-commerce strategy to evolve from its "bricks and mortar" site, unlike e.Coles-Myer, which has been split off as a separate entity. The Woolworths strategy may prove to be the best retail model in the long haul (dubbed "clicks and mortar") because customers feel more confident to deal with retailers who have strong and established brand images. Pharmacists are advised to take a strong interest in these developments and develop suitable strategies now, rather than later. Developments on the Internet are taking place so rapidly, that six months on the Internet almost equates to a business lifetime. In an earlier edition of this newsletter, we reported on global supermarket operators targeting Australia as their next conquest. Aldi, the first of the new wave of intruders, initially targeted Franklins, because of its weak profit performance, for a takeover. This threat appears to have subsided for now. The impact of the new operators will be felt more by Franklins than Woolworths or Coles, because, until recent times, Franklins was your basic, no frills discounter. By departing from a successful base to its "fresh" program, it has left the back door open to the deep discount market segment. Accordingly, Franklins have decided to copy the Aldi strategy by developing a lookalike store. A pilot store is being established in Guildford under the trading name of "Cheaper Choice", and this location is very close to the Fairfield-Cabramatta area, where it is known that Aldi have submitted three development applications. The proposed inventory for "Cheaper Choice" will consist of a limited range of generics and private labels to be sold at a deep discount. Some observers believe the Franklin's strategy to be flawed in that they have limited experience of the Aldi-type business and that it is too early to meet Aldi in a head-on battle. Aldi is well cashed up, and Franklins is not so advantaged. While these operations pose no immediate threat to pharmacy, they do threaten Australia's basic economy as they outsource processed foods, and they are all waiting in the wings should pharmacy ownership be opened up again over the next five to seven years. Post these developments as intermediate term threats, and factor them into your own strategies for survival.
From Rollo Manning
NEW SCHEME FOR BETTER MEDICATION MANAGEMENT
Pharmacists are likely to be at the forefront of a system
for Australians, which will change the quality control aspects of the
prescribing and dispensing of medications. A task force within the Department
of Health and Aged Care has developed the proposal. This comprised representatives
of a wide range of pharmaceutical, medical and information technology
interests. It is currently with the Minister, Dr Michael Woolridge, for
final approval after having received the endorsement of stakeholders,
including the pharmaceutical industry, medical profession and State and
Territory governments. The system development is in response to a need
brought about by the fact that each prescribing and dispensing event happens
in isolation, giving rise to the possibility that patients are at risk
through the possibility of adverse interactions between medications and
inconsistent prescribing by different doctors. The proposal will create
an individual patient medication record by linking prescriptions written
by different doctors or dispensed by different pharmacists. The medication
record will be totally accessible to the patient, who will have to give
consent from the outset for information to be gathered. The system will
be voluntary for all participants, including pharmacists and medicos,
and will be regulated and monitored by an independent authority. Strict
privacy protection guidelines will be followed and there will be a complaint
mechanism. The electronic medication record will be a tool to achieve
improvements in health outcomes. Consumers will be able to be more active
and informed with decisions regarding their health, while doctors will
be in a position to make prescribing decisions in the context of full
and timely knowledge of their patient’s medication history. Pharmacists
will complete the quality assurance cycle. Medication details entered
once, will be accessed as needed and agreed by the individual and the
doctor or pharmacist they are going to. The proposal raises many questions
about an electronic patient medication record, which will need further
consideration and consultation. It also flags improvements, which could
come in the future, when the system has matured. Initially the proposal
will concentrate on what can be achieved immediately. It will cover the
Pharmaceutical Benefits Scheme, the Repatriation Pharmaceutical Benefits
Scheme and possibly other hospital prescriptions. The States/Territories
are currently considering a proposal from the Commonwealth to move medicines
for outpatients and patients on discharge to the PBS. This is well advanced
and is expected to be implemented in some States/Territories from July
1, 2000. The dispensing of PBS from hospitals will give the opportunity
to capture information on that aspect of patients’ prescribing and dispensing
not previously possible. Costs of the medication information scheme will
be considerable, however the Government is looking to the future and hoping
to set up a system that can be expanded as each step is refined. Electronic
prescribing is not beyond possibility, and will need the cooperation of
the States to cater for new requirements in the poisons legislation. Current
estimates put the cost at $25 million in payments to general practitioners
and pharmacists when the take up of the new arrangements reaches 80-90%
of the possible market. Development and implementation of a quality central
database could be as much as $12 million over the first 4 years, and $2
million dollars per year to maintain thereafter. It is expected that communication
and education could cost up to $10 million over the 2 years following
the announcement of the new arrangements. Technical infrastructure will
cost up to $25m to develop and implement, and $5m per year to maintain
thereafter. A formal announcement is expected very soon and some of the
details could be in the context of the Federal Budget this month, as well
as the finalised arrangements for the Third Community Pharmacy Agreement.
Footnote: The views expressed are those
of the author and no other party
Anticipating the pressures of globalisation, Coles-Myer
has formulated a purchasing strategy by taking up equity in GlobalNetXchange.
The initial investment is $5 million and gives Coles-Myer an alliance
with four of the world's top retail chains, having a combined buying power
of $350 billion annually. The move helps to insulate Coles-Myer from the
effects of global competitors, of which there are estimated seven major
players, including those entities with which they have forged their alliance.
Impending competition from Aldi, and their initial 100 Sydney-based stores,
will be somewhat blunted. The system is a paperless system and enables
substantial cost reduction, in distribution, to occur. A similar system
(known as PECC) is being developed in Australia for the pharmaceutical
industry, which has the capacity to change distribution practices in both
community and hospital pharmacies. While the system is not global as yet,
it has the potential to be integrated into an alliance similar to the
Coles-Myer venture. As pharmacy wholesalers and manufacturers iron out
their processes, the next target is hospital pharmacy. Regional bulk stores
will be dismantled, and hospital ward imprest cupboards serviced directly
by wholesalers, completely bypassing the hospital dispensaries. The system
is to be developed to patient level, by replacing manufacturer packs with
unit dose delivery systems. This has the potential to eliminate in-house
dispensing totally. Once hospitals are basically automated, community
pharmacies will be targeted for radical changes in their buying practices.
This is one reason why pharmacists should be looking to merge strategically
after incorporation is allowed by the various Pharmacy Acts. Remember,
past July 1st, hospital dispensaries will be able to dispense National
Health prescriptions and with such an economical and efficient distribution
system in place within hospitals, it could be a "no contest" for the small
independent community pharmacist should the government institute a tendering
process for drug prices.
Price rules!
It certainly worries me to know that pharmacy has to re-engineer itself
regionally, nationally and globally, with a strong e-commerce base. We
have no national strategy to combat our new competitors. We are light
years behind our major competitors in our business structures, and we
need to become very visible very quickly. For visibility, read levels
of capital investment far in excess of what we have ever experienced.
BOOKMARK A USEFUL PHARMACY DIRECTORY
Computachem Services has developed pharmacy relevant Interweb Directory with many useful reference links catalogued. Careful attention has been paid to navigation facilities, and you are able to access information very easily. Sites are classified by type and are housed in a "drop down" menu index. An extremely fast Internet search engine is also a feature. This address http://www.computachem.com.au/links/links.htm is a must for your bookmark or favorites index. Suggestions are welcomed for new subjects or for site addresses you can recommend.
An Australian company, PharmaNet Online has established an e-commerce venture in China, through the establishment of the electronic Pharmaceutical Trading Exchange. This system allows 30 distributors and 100 hospitals in Shanghai to trade about 300 pharmacy drugs, with PharmaNet taking a 1% commission on each transaction. PharmaNet is best known through its subsidiary, Simple Retail, which sells point of sale software to pharmacies throughout Australia. It is a public company and has Neville Wran, a former Labor NSW premier, chairing its board. Trading in China began in October 1999 and the market is estimated to approach $1 billion. Similar systems such as Chemdex in America can generate up to 40% savings in purchase price.
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